UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
Commission File Number 0-21104
CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
---------
Florida 59-2417093
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1655 Roberts Boulevard, NW
Kennesaw, Georgia 30144
(Address of principal executive offices)
(zip code)
(770) 419-3355
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
_____ _____
The number of shares of common stock, par value $0.01 per share, outstanding on
August 12, 1998 was 12,800,533.
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial statements
CRYOLIFE, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ------------------------
1998 1997 1998 1997
---------------------------- ------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Cryopreservation and products $ 15,477,000 $ 12,641,000 $ 29,978,000 $ 23,024,000
Research grants, licenses and other revenues 785,000 82,000 909,000 112,000
---------------------------- ----------------------------
16,262,000 12,723,000 30,887,000 23,136,000
Costs and expenses:
Cost of cryopreservation and products 6,345,000 4,550,000 11,826,000 7,976,000
General, administrative and marketing 5,841,000 5,165,000 11,707,000 9,644,000
Research and development 1,256,000 857,000 2,267,000 1,706,000
Interest (income) expense (281,000) 296,000 110,000 428,000
---------------------------- ----------------------------
13,161,000 10,868,000 25,910,000 19,754,000
---------------------------- ----------------------------
Income before income taxes 3,101,000 1,855,000 4,977,000 3,382,000
Income tax expense 1,053,000 695,000 1,757,000 1,270,000
---------------------------- ----------------------------
Net income $ 2,048,000 $ 1,160,000 $ 3,220,000 $ 2,112,000
============================ ============================
Earnings per share:
Basic $ 0.16 $ 0.12 $ 0.29 $ 0.22
============================ ============================
Diluted $ 0.16 $ 0.12 $ 0.28 $ 0.21
============================ ============================
Weighted average shares outstanding:
Basic 12,709,000 9,615,000 11,219,000 9,598,000
============================ ============================
Diluted 13,033,000 9,889,000 11,577,000 9,881,000
============================ ============================
See accompanying notes to summary consolidated financial statements.
<PAGE>
Item 1. Financial Statements
CRYOLIFE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1998 1997
------------------------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 32,106,000 $ 111,000
Receivables (net) 10,320,000 9,765,000
Deferred preservation costs (net) 13,295,000 12,257,000
Inventories 3,477,000 1,761,000
Prepaid expenses and other assets 2,103,000 1,260,000
-----------------------------------
Total current assets 61,301,000 25,154,000
-----------------------------------
Property and equipment (net) 18,458,000 15,487,000
Goodwill (net) 9,502,000 9,809,000
Patents (net) 2,253,000 2,196,000
Other (net) 1,529,000 1,103,000
-----------------------------------
TOTAL ASSETS $ 93,043,000 $ 53,749,000
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
Accounts payable $ 1,142,000 $ 1,612,000
Accrued expenses 352,000 534,000
Accrued procurement fees 1,990,000 1,565,000
Accrued compensation 1,081,000 1,122,000
Current maturities of capital lease obligations 215,000 ---
Current maturities of long-term debt 496,000 1,496,000
Income taxes payable 381,000 ---
-----------------------------------
Total current liabilities 5,657,000 6,329,000
-----------------------------------
Deferred income taxes 384,000 327,000
Capital lease obligations, less current maturities 1,829,000 ---
Bank loans --- 10,777,000
Convertible debenture 4,393,000 5,000,000
Other long-term debt 814,000 1,089,000
-----------------------------------
Total liabilities 13,077,000 23,522,000
-----------------------------------
Shareholders' equity:
Preferred stock --- ---
Common stock (issued 12,792,000 shares in 1998 and
10,243,000 shares in 1997) 133,000 102,000
Additional paid-in capital 64,166,000 17,694,000
Retained earnings 15,847,000 12,627,000
Less: Treasury stock (543,000 shares) (180,000) (180,000)
Note receivable from shareholder --- (16,000)
-----------------------------------
Total shareholders' equity 79,966,000 30,227,000
-----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 93,043,000 $ 53,749,000
===================================
See accompanying notes to summary consolidated financial statements.
</TABLE>
<PAGE>
Item 1. Financial Statements
<TABLE>
CRYOLIFE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30,
-----------------------
1998 1997
(Unaudited)
<S> <C> <C>
Net cash flows provided by (used in) operating activities:
Net income $ 3,220,000 $ 2,112,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,808,000 1,595,000
Provision for doubtful accounts 53,000 15,000
Deferred income taxes 57,000 (1,000)
Receivables (608,000) 822,000
Deferred preservation costs and inventories (2,754,000) (3,222,000)
Prepaid expenses and other assets (843,000) (737,000)
Accounts payable and accrued expenses 113,000 (2,922,000)
-----------------------------------
Net cash flows provided by (used in) operating activities 1,046,000 (2,338,000)
-----------------------------------
Net cash flows used in investing activities:
Capital expenditures (2,090,000) (2,571,000)
Other assets (724,000) 280,000
Cash paid for acquisition, net of cash acquired --- (4,418,000)
Net sales of marketable securities --- 2,000
-----------------------------------
Net cash flows used in investing activities (2,814,000) (6,707,000)
-----------------------------------
Net cash flows provided by financing activities:
Principal payments of debt (13,732,000) ---
Proceeds from borrowings on revolving term loan 1,680,000 7,581,000
Payment of obligations under capital leases (97,000) ---
Proceeds from issuance of common stock and
from notes receivable from shareholders 45,912,000 302,000
-----------------------------------
Net cash provided by financing activities 33,763,000 7,883,000
-----------------------------------
Increase (decrease) in cash 31,995,000 (1,162,000)
Cash and cash equivalents, beginning of period 111,000 1,370,000
-----------------------------------
Cash and cash equivalents, end of period $ 32,106,000 $ 208,000
===================================
Supplemental cash flow information
Non-cash investing and financing activities:
Establishing capital lease obligations $ 2,141,000 $ ---
===================================
Debt conversion into common stock $ 607,000 $ ---
===================================
Fair value of assets acquired $ --- $ 1,768,000
Cost in excess of assets acquired --- 8,541,000
Liabilities assumed --- (891,000)
Debt issued for assets acquired --- (5,000,000)
-----------------------------------
Net cash paid for acquisition $ --- $ 4,418,000
===================================
See accompanying notes to summary consolidated financial statements.
</TABLE>
<PAGE>
CRYOLIFE, INC. AND SUBSIDIARIES
NOTES TO SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with (i) generally accepted accounting principles for
interim financial information and (ii) the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial presentations. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included. Operating results for the three and six months
ended June 30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the year ended December 31, 1997.
NOTE 2 - FOLLOW-ON EQUITY OFFERING
On April 3, 1998 the Company completed a follow-on equity offering (the
"Offering") of 2,588,000 new shares of its common stock resulting in net
proceeds of $39.4 million. On April 16, 1998 the Company issued an additional
387,500 shares of common stock pursuant to the underwriters' overallotment
option resulting in $6.0 million of additional net proceeds to the Company. A
portion of the net proceeds were used to repay outstanding amounts under the
Company's bank loans and for expansion of manufacturing facilities. The
remainder of the proceeds will be used for additional expansion of manufacturing
facilities and for general corporate purposes, including working capital and
potential acquisitions.
In conjunction with the Offering, $607,000 of the convertible debentures were
converted into 50,000 shares of the Company's common stock.
NOTE 3 - INVESTMENTS
Management determines the appropriate classification of investments at the time
of purchase and reevaluates such designation at each balance sheet date.
Available for sale securities are carried at fair value, with unrealized gains
and losses reported in a separate component of stockholders' equity. Realized
gains and losses are included in investment income and are determined on a
first-in, first-out basis.
At June 30, 1998 and December 31, 1997, the Company held $30.4 million and $0,
respectively, in mutual funds and money market funds. All investments were
classified as available for sale as of June 30, 1998. Fair market value is
equivalent to cost at June 30, 1998. All investments held by the Company have
original maturities of less than 90 days and are classified as cash and cash
equivalents as of June 30, 1998.
NOTE 4 - INVENTORY
Inventories are comprised of the following:
(Unaudited)
June 30, December 31,
1998 1997
-------------------------------------
Raw materials $ 394,000 $ 262,000
Work-in-process 668,000 358,000
Finished goods 2,415,000 1,141,000
-------------------------------------
$ 3,477,000 $ 1,761,000
=====================================
<PAGE>
NOTE 5 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1998 1997 1998 1997
------------------------ -----------------------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings
per share - income available to
common shareholders $ 2,048,000 $ 1,160,000 $3,220,000 $2,112,000
======================== =======================
Denominator for basic earnings per share -
weighted-average basis 12,709,000 9,615,000 11,219,000 9,598,000
Effect of dilutive stock options 324,000 274,000 358,000 283,000
------------------------ ------------------------
Denominator for diluted earnings per share -
adjusted weighted-average shares 13,033,000 9,889,000 11,577,000 9,881,000
======================== ========================
Earnings per share:
Basic $ .16 $ .12 $.29 $ .22
======================== =================
Diluted $ .16 $ .12 $.28 $ .21
======================== =================
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Cryopreservation and product revenues increased 22% to $15.5 million for the
three months ended June 30, 1998 from $12.6 million for the same period in 1997.
Cryopreservation and product revenues increased 30% to $30.0 million for the six
months ended June 30, 1998 from $23.0 million for the same period in 1997. The
increase in revenues was primarily due to the growing acceptance in the medical
community of cryopreserved tissues which has resulted in increased demand, the
Company's ability to procure greater amounts of tissue, price increases for
certain cryopreservation services and revenues attributable to the Company's
line of single-use devices following the Ideas for Medicine, Inc. ("IFM")
acquisition in March 1997. Revenues for the six months ended June 30, 1998 and
June 30, 1997 included $3.2 million and $2.1 million respectively, attributable
to the acquisition of IFM.
Revenues from human heart valve and conduit cryopreservation services increased
9% to $7.9 million for the three months ended June 30, 1998 from $7.3 million
for the three months ended June 30, 1997, representing 47% and 57%,
respectively, of total revenues during such periods. Revenues from human heart
valve and conduit cryopreservation services increased 12% to $15.3 million for
the six months ended June 30, 1998 from $13.8 million for the six months ended
June 30, 1997, representing 49% and 59%, respectively, of total revenues during
such periods. This increase in revenues was primarily due to a 7% and an 11%
increase in the number of heart allograft shipments for the three months and six
months ended June 30, 1998, respectively, due to an increased demand and the
Company's ability to procure greater amounts of tissue.
Revenues from human vascular tissue cryopreservation services increased 39% to
$3.6 million for the three months ended June 30, 1998 from $2.6 million for the
three months ended June 30, 1997, representing 22% and 20%, respectively, of
total revenues during such periods. Revenues from human vascular tissue
cryopreservation services increased 38% to $7.1 million for the six months ended
June 30, 1998 from $5.1 million for the six months ended June 30, 1997,
representing 23% and 22%, respectively, of total revenues during such periods.
This increase in revenues was primarily due to a 45% and a 39% increase in the
number of vascular allograft shipments for the three months and six months ended
June 30, 1998, respectively, due to an increased demand and the Company's
ability to procure greater amounts of tissue.
Revenues from human connective tissue cryopreservation services increased 87% to
$1.9 million for the three months ended June 30, 1998 from $1.0 million for the
three months ended June 30, 1997, representing 12% and 8%, respectively, of
total revenues during such periods. Revenues from human connective tissue
cryopreservation services increased 116% to $3.7 million for the six months
ended June 30, 1998 from $1.7 million for the six months ended June 30, 1997,
representing 12% and 7%, respectively, of total revenues during such periods.
This increase in revenues was primarily due to a 58% and an 85% increase in the
number of allograft shipments for the three months and six months ended June 30,
1998, respectively, due to increased demand and the Company's ability to procure
greater amounts of tissue. Additional revenue increases have resulted from a
greater proportion of the 1998 shipments consisting of cryopreserved menisci,
which have a significantly higher per unit revenue than the Company's
cryopreserved tendons and price increases for the cryopreservation of menisci.
Revenues from bioprosthetic cardiovascular devices increased 61% to $218,000 for
the three months ended June 30, 1998 from $135,000 for the three months ended
June 30, 1997, representing 1% of total revenues during such periods. Revenues
from bioprosthetic cardiovascular devices increased 75% to $418,000 for the six
months ended June 30, 1998 from $239,000 for the six months ended June 30, 1997,
representing 1% of total revenues during such periods. This increase in revenues
was primarily due to a 42% and an 88% increase in the number of bioprosthetic
cardiovascular device shipments for the three months and six months ended June
30, 1998, respectively, due to increased manufacturing capacity.
Other revenues increased to $785,000 for the three months ended June 30, 1998
from $82,000 for the three months ended June 30, 1997. Other revenues increased
to $909,000 for the six months ended June 30, 1998 from $112,000 for the six
months ended June 30, 1997. Other revenues in 1998 relate primarily to proceeds
from the sale of the Company's port product line and research grant awards for
the Company's SynerGraft(R) technology.
<PAGE>
Cost of cryopreservation services and products aggregated $6.3 million for the
three months ended June 30, 1998, compared to $4.6 million for the corresponding
period in 1997, representing 41% and 36%, respectively, of total
cryopreservation and product revenues in each period. Cost of cryopreservation
services and products aggregated $11.8 million for the six months ended June 30,
1998, compared to $8.0 million, respectively, for the six months ended June 30,
1997, representing 39% and 35% of total cryopreservation and product revenues,
respectively. Cost of cryopreservation services and products increased 39% for
the second quarter 1998 compared to the second quarter 1997. The increase in
1998 of the cost of cryopreservation services and products as a percentage of
revenues results from a lesser portion of 1998 revenues being derived from human
heart valve and conduit cryopreservation services which carry a significantly
higher gross margin than other cryopreservation services, from increased
manufacturing overhead costs associated with the Company's new manufacturing
facilities and from the inclusion of six months of IFM's sales in 1998, which
generate lower gross margins than cryopreservation services, compared with four
months of IFM sales in the first six months of 1997.
General, administrative and marketing expenses increased 13% to $5.8 million for
the three months ended June 30, 1998, compared to $5.2 million for the
corresponding period in 1997, representing 38% and 41%, respectively, of total
cryopreservation and product revenues in each period. General, administrative
and marketing expenses increased 21% to $11.7 million for the six months ended
June 30, 1998, compared to $9.6 million for the corresponding period in 1997,
representing 39% and 42%, respectively, of total cryopreservation and product
revenues in each period. The increase in expenditures in 1998 resulted from
expenses incurred to support the increase in revenues and costs associated with
the introduction of BioGlue into the European community.
Research and development expenses increased 47% to $1.3 million for the three
months ended June 30, 1998, compared to $857,000 for the corresponding period in
1997, representing 8% and 7%, respectively, of total cryopreservation and
product revenues for each period. Research and development expenses increased
33% to $2.3 million for the six months ended June 30, 1998, compared to $1.7
million for the corresponding period in 1997, representing 8% and 7%,
respectively, of total cryopreservation and product revenues for each period.
Research and development spending relates principally to the Company's focus on
its bioadhesives and SynerGraft technologies.
Net interest income was $281,000 for the three months ended June 30, 1998
compared to net interest expense of $296,000 for the corresponding period in
1997. Net interest expense decreased to $110,000 for the six months ended June
30, 1998 compared to $428,000 for the corresponding period in 1997. This
decrease in interest expense for the three and six months ended June 30, 1998 is
due to the repayment of certain indebtedness with the proceeds from the
follow-on equity offering, as well as the conversion of a portion of the
convertible debenture into common stock of the Company, and the receipt of
interest income on the invested proceeds from the Offering.
The decline in the effective income tax rate to 34% from 37.5% for the three
months ended June 30, 1998 and 1997, respectively, and to 35.3% from 37.6% for
the six months ended June 30, 1998 and 1997, respectively, is due to the
implementation of state tax planning strategies.
<PAGE>
Seasonality
The demand for the Company's human heart valve and conduit cryopreservation
services is seasonal, with peak demand generally occurring in the second and
third quarters. Management believes that this demand trend for human heart valve
and conduit cryopreservation services is primarily due to the high number of
surgeries scheduled during the summer months. Management believes that the
trends experienced by the Company to date for its human connective tissue for
the knee cryopreservation services indicate that this business may also be
seasonal because it is an elective procedure that may be performed less
frequently during the fourth quarter holiday months. However, the demand for the
Company's human vascular tissue cryopreservation services, bioprosthetic
cardiovascular devices, single-use medical devices and BioGlue does not appear
to experience this seasonal trend.
Liquidity and Capital Resources
At June 30, 1998, net working capital was $55.6 million, compared to $18.8
million at December 31, 1997, with a current ratio of 9 to 1 at June 30, 1998.
The Company's primary capital requirements arise out of general working capital
needs, capital expenditures for facilities and equipment and funding of research
and development projects. The Company historically has funded these requirements
through bank credit facilities, cash generated by operations and equity
offerings.
Net cash provided by operating activities was $1.0 million for the six months
ended June 30, 1998, as compared to net cash used in operating activities of
$2.3 million for the six months ended June 30, 1997. This increase primarily
resulted from a decrease in the amount of accounts payable liquidated in the
first quarter in 1998 as compared to the first quarter in 1997 due to the
construction of the Company's new corporate headquarters and manufacturing
facility, partially offset by an increase in accounts receivable.
Net cash used in investing activities was $2.8 million for the six months ended
June 30, 1998, as compared to $6.7 million for the six months ended June 30,
1997. This decrease was primarily attributable to the absence of a business
acquisition during the first quarter of 1998 as compared to the first quarter of
1997, during which the Company acquired IFM, coupled with a decrease in capital
expenditures during the first six months of 1998.
Net cash provided by financing activities was $33.8 million for the six months
ended June 30, 1998, as compared to $7.9 million for the six months ended June
30, 1997. This increase was primarily attributable to proceeds of $45.4 million
from the Offering, partially offset by the repayment of borrowings on the
Company's bank loans, and accrued interest thereon, totaling $13.3 million.
The Company anticipates that the net proceeds from the Offering and cash
generated from operations will be sufficient to meet its operating and
development needs for the next 12 months. However, the Company's future
liquidity and capital requirements beyond that period will depend upon numerous
factors, including the timing of the Company's receipt of FDA approvals to begin
clinical trials for its products currently in development, the resources
required to further develop its marketing and sales capabilities if, and when,
those products gain approval, the resources required to expand manufacturing
capacity and the extent to which the Company's products generate market
acceptance and demand. There can be no assurance that the Company will not
require additional financing or will not seek to raise additional funds through
bank facilities, debt or equity offerings or other sources of capital to meet
future requirements. These additional funds may not be available when needed or
on terms acceptable to the Company, which could have a material adverse effect
on the Company's business, financial condition and results of operations.
<PAGE>
Year 2000
The Company is aware of the issues that many computer systems will face as the
millennium (year 2000) approaches. The Company, however, believes that its own
internal software and hardware is year 2000 compliant. The Company believes that
any year 2000 problems encountered by procurement agencies, hospitals and other
customers and vendors are not likely to have a material adverse effect on the
Company's operations. The Company anticipates no other year 2000 problems which
are reasonably likely to have a material adverse effect on the Company's
operations. There can be no assurance, however, that such problems will not
arise.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130, Reporting Comprehensive Income ("Statement 130"). The Company adopted
Statement 130 for the quarter ended June 30, 1998. Due to the immateriality of
the Company's elements of comprehensive income, such adoption had no effect on
the Company's consolidated financial statements.
Forward-Looking Statements
Statements made in this Form 10-Q for the quarter ended June 30, 1998 that state
the Company's or management's intentions, hopes, beliefs, expectations or
predictions of the future are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. It is important to note
that the Company's actual results could differ materially from those contained
in such forward-looking statements as a result of adverse changes in any of a
number of factors that affect the Company's business, including without
limitation, changes in (1) government regulation of the Company's business, (2)
the Company's competitive position, (3) the availability of tissue for implant,
(4) the status of the Company's products under development, (5) the protection
of the Company's proprietary technology and (6) the reimbursement of health care
costs by third-party payors. See the "Business-Risk Factors" section of the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 for a
more detailed discussion of these and other factors which might affect the
Company's future performance.
Item 3. Qualitative and Quantitative Discussion About Market Risk.
Not Applicable.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Shareholders was held on May 21, 1998.
(b) Management's nominees for director were elected at the meeting by
the holders of common stock. The election was uncontested.
(c) A proposal to approve the Company's 1998 Long-Term Incentive Plan
was approved. The result of the voting was as follows:
Common Shares
-------------
Voting for 10,488,899
Voting against 1,006,191
Abstain from voting 42,300
Broker Non-votes 109,105
-----------
Total 11,646,495
==========
A proposal to approve the Company's Amended and Restated
Non-Employee Directors Stock Option Plan was approved. The result
of the voting was a follows:
Common Shares
-------------
Voting for 11,213,183
Voting against 272,674
Abstain from voting 51,533
Broker Non-votes 109,105
-----------
Total 11,646,495
==========
The following table shows the results of voting in the election
of Directors:
Shares Voted For Authority Withheld
---------------- ------------------
Steven G. Anderson 11,614,904 31,591
Ronald C. Elkins, M.D. 11,615,704 30,791
Benjamin H. Gray 11,615,704 30,791
Virginia C. Lacy 11,534,704 111,791
Ronald D. McCall, Esq. 11,615,704 30,791
Item 5. Other information.
With respect to the Company's annual meeting of shareholders to be held
in 1999, all shareholder proposals submitted outside the shareholder
proposal rules contained in Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, as amended, which pertains to the inclusion of
shareholder proposals in a Company's proxy materials, must be received
by the Company by March 3, 1999, in order to be considered timely. With
regard to such shareholder proposals, if the date of the next annual
meeting of shareholders is advanced or delayed by more than 30 calendar
days from May 21, 1999, the Company shall, in a timely manner, inform
its shareholders of the change, and the date by which such proposals
must be received. As set forth in the Company's Proxy Statement dated
April 17, 1998, shareholders who wish to avail themselves of the
provisions of Rule 14a-8 must submit their proposals no later than
December 18, 1998.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibit index can be found below.
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (No. 33-56388).)
3.2 Amendment to Articles of Incorporation of the Company dated November 29,
1995. (Incorporated by reference to Exhibit 3.2 to the Registrant's Annual
Report on Form 10-K for the fiscal three months ended December 31, 1995.)
3.3 Amendment to the Company's Articles of Incorporation to increase the number
of authorized shares of common stock from 20 million to 50 million shares
and to delete the requirement that all preferred shares have one vote per
share. (Incorporated by reference to Exhibit 3.3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.)
3.4 ByLaws of the Company, as amended. (Incorporated by reference to Exhibit
3.2 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.)
10.1 1998 Long-Term Incentive Plan (Incorporated by reference to Appendix 1 to
the Company's Definitive Proxy Statement filed with the Commission on April
17, 1998).
10.2 Amended and Restated Non-Employee Directors Stock Option Plan (Incorporated
by reference to Appendix 2 to the Company's Definitive Proxy Statement
filed with the Commission on April 17, 1998).
27.1 Financial Data Schedule: Quarter Ended June 30, 1998
27.2 Restated Financial Data Schedule: Fiscal Year Ended December 31, 1996
27.3 Restated Financial Data Schedule: Quarter Ended March 31, 1996
27.4 Restated Financial Data Schedule: Quarter Ended June 30, 1996
27.5 Restated Financial Data Schedule: Quarter Ended September 30, 1996
27.6 Restated Financial Data Schedule: Quarter Ended March 31, 1997
27.7 Restated Financial Data Schedule: Quarter Ended June 30, 1997
27.8 Restated Financial Data Schedule: Quarter Ended September 30, 1997
(b) Current Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRYOLIFE, INC.
(Registrant)
August 13, 1998 /s/ EDWIN B. CORDELL, JR.
- ------------------ ----------------------------------
DATE EDWIN B. CORDELL, JR.
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 32,106,000
<SECURITIES> 0
<RECEIVABLES> 10,470,000
<ALLOWANCES> 150,000
<INVENTORY> 3,477,000
<CURRENT-ASSETS> 61,301,000
<PP&E> 27,404,000
<DEPRECIATION> 8,946,000
<TOTAL-ASSETS> 93,043,000
<CURRENT-LIABILITIES> 5,657,000
<BONDS> 7,747,000
0
0
<COMMON> 133,000
<OTHER-SE> 79,833,000
<TOTAL-LIABILITY-AND-EQUITY> 93,043,000
<SALES> 2,043,000
<TOTAL-REVENUES> 30,887,000
<CGS> 1,259,000
<TOTAL-COSTS> 11,826,000
<OTHER-EXPENSES> 14,084,000
<LOSS-PROVISION> 53,000
<INTEREST-EXPENSE> 110,000
<INCOME-PRETAX> 4,977,000
<INCOME-TAX> 1,757,000
<INCOME-CONTINUING> 3,220,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,220,000
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CRYOLIFE, INC. FOR THE YEAR ENDED DECEMBER 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,369,699
<SECURITIES> 43,145
<RECEIVABLES> 6,571,751
<ALLOWANCES> 94,287
<INVENTORY> 260,796
<CURRENT-ASSETS> 18,181,323
<PP&E> 17,353,960
<DEPRECIATION> 5,787,596
<TOTAL-ASSETS> 34,972,719
<CURRENT-LIABILITIES> 7,244,628
<BONDS> 0
0
0
<COMMON> 101,103
<OTHER-SE> 24,828,088
<TOTAL-LIABILITY-AND-EQUITY> 34,972,719
<SALES> 0
<TOTAL-REVENUES> 37,228,354
<CGS> 0
<TOTAL-COSTS> 12,593,126
<OTHER-EXPENSES> 18,551,612
<LOSS-PROVISION> 166,600
<INTEREST-EXPENSE> 71,800
<INCOME-PRETAX> 6,083,616
<INCOME-TAX> 2,156,135
<INCOME-CONTINUING> 3,927,481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,927,481
<EPS-PRIMARY> .41
<EPS-DILUTED> .40
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,273,142
<SECURITIES> 4,485,974
<RECEIVABLES> 6,352,965
<ALLOWANCES> 43,187
<INVENTORY> 333,884
<CURRENT-ASSETS> 19,275,685
<PP&E> 8,592,933
<DEPRECIATION> 5,069,543
<TOTAL-ASSETS> 25,098,513
<CURRENT-LIABILITIES> 3,723,505
<BONDS> 0
0
0
<COMMON> 50,059
<OTHER-SE> 21,324,949
<TOTAL-LIABILITY-AND-EQUITY> 21,375,008
<SALES> 0
<TOTAL-REVENUES> 8,433,807
<CGS> 0
<TOTAL-COSTS> 2,878,849
<OTHER-EXPENSES> 4,315,765
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,239,193
<INCOME-TAX> 456,696
<INCOME-CONTINUING> 782,497
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 782,497
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 58,061
<SECURITIES> 4,317,254
<RECEIVABLES> 7,154,569
<ALLOWANCES> (53,837)
<INVENTORY> 332,885
<CURRENT-ASSETS> 19,361,114
<PP&E> 9,904,814
<DEPRECIATION> (5,324,542)
<TOTAL-ASSETS> 26,955,837
<CURRENT-LIABILITIES> 4,022,378
<BONDS> 0
0
0
<COMMON> 100,582
<OTHER-SE> 22,387,061
<TOTAL-LIABILITY-AND-EQUITY> 26,955,837
<SALES> 0
<TOTAL-REVENUES> 18,131,677
<CGS> 0
<TOTAL-COSTS> 6,168,219
<OTHER-EXPENSES> 9,197,548
<LOSS-PROVISION> 28,400
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,765,910
<INCOME-TAX> 994,974
<INCOME-CONTINUING> 1,770,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,770,936
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 97,145
<SECURITIES> 2,145,688
<RECEIVABLES> 7,311,881
<ALLOWANCES> (88,737)
<INVENTORY> 353,427
<CURRENT-ASSETS> 17,446,326
<PP&E> 15,231,276
<DEPRECIATION> 5,579,541
<TOTAL-ASSETS> 32,109,252
<CURRENT-LIABILITIES> 4,540,416
<BONDS> 0
0
0
<COMMON> 101,060
<OTHER-SE> 23,885,217
<TOTAL-LIABILITY-AND-EQUITY> 32,109,252
<SALES> 0
<TOTAL-REVENUES> 28,542,326
<CGS> 0
<TOTAL-COSTS> 9,731,419
<OTHER-EXPENSES> 14,090,993
<LOSS-PROVISION> 81,600
<INTEREST-EXPENSE> 39,269
<INCOME-PRETAX> 4,719,914
<INCOME-TAX> 1,687,524
<INCOME-CONTINUING> 3,032,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,032,390
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.31
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF CRYOLIFE, INC. AS OF MARCH 31, 1997 AND
THE RELATED UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 192,000
<SECURITIES> 42,000
<RECEIVABLES> 9,110,000
<ALLOWANCES> 131,000
<INVENTORY> 1,073,000
<CURRENT-ASSETS> 20,858,000
<PP&E> 18,533,000
<DEPRECIATION> 6,167,000
<TOTAL-ASSETS> 47,063,000
<CURRENT-LIABILITIES> 6,570,000
<BONDS> 5,000,000
0
0
<COMMON> 101,000
<OTHER-SE> 25,909,000
<TOTAL-LIABILITY-AND-EQUITY> 47,063,000
<SALES> 554,000
<TOTAL-REVENUES> 10,413,000
<CGS> 282,000
<TOTAL-COSTS> 3,426,000
<OTHER-EXPENSES> 5,328,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 132,000
<INCOME-PRETAX> 1,527,000
<INCOME-TAX> 575,000
<INCOME-CONTINUING> 575,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 575,000
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
CONSOLIDATED BALANCE SHEET OF CRYOLIFE, INC. AS OF JUNE 30, 1997 AND THE RELATED
UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 208,000
<SECURITIES> 41,000
<RECEIVABLES> 8,067,000
<ALLOWANCES> 131,000
<INVENTORY> 1,257,000
<CURRENT-ASSETS> 21,792,000
<PP&E> 19,932,000
<DEPRECIATION> 7,140,000
<TOTAL-ASSETS> 47,937,000
<CURRENT-LIABILITIES> 5,165,000
<BONDS> 5,000,000
0
0
<COMMON> 102,000
<OTHER-SE> 27,241,000
<TOTAL-LIABILITY-AND-EQUITY> 47,937,000
<SALES> 2,176,000
<TOTAL-REVENUES> 23,136,000
<CGS> 1,291,000
<TOTAL-COSTS> 7,976,000
<OTHER-EXPENSES> 11,350,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 428,000
<INCOME-PRETAX> 3,382,000
<INCOME-TAX> 1,270,000
<INCOME-CONTINUING> 2,112,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,112,000
<EPS-PRIMARY> .22
<EPS-DILUTED> .21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDIED
CONSOLIDATED BALANCE SHEET OF CRYOLIFE, INC. AS OF SEPTEMBER 30, 1997 AND THE
RELATED UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784199
<NAME> CRYOLIFE, INC.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 42,000
<SECURITIES> 41,000
<RECEIVABLES> 10,040,000
<ALLOWANCES> 146,000
<INVENTORY> 1,487,000
<CURRENT-ASSETS> 24,936,000
<PP&E> 20,997,000
<DEPRECIATION> 7,488,000
<TOTAL-ASSETS> 51,684,000
<CURRENT-LIABILITIES> 6,417,000
<BONDS> 5,000,000
0
0
<COMMON> 102,000
<OTHER-SE> 28,842,000
<TOTAL-LIABILITY-AND-EQUITY> 51,684,000
<SALES> 3,864,000
<TOTAL-REVENUES> 37,814,000
<CGS> 1,874,000
<TOTAL-COSTS> 13,089,000
<OTHER-EXPENSES> 18,994,000
<LOSS-PROVISION> 31,000
<INTEREST-EXPENSE> 744,000
<INCOME-PRETAX> 5,731,000
<INCOME-TAX> 2,161,000
<INCOME-CONTINUING> 3,570,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,570,000
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
